As of January 1, the self-employed will not be able to make payments of more than 1,000 euros in cash

For the rest of the companies, the limit will be 3000 euros

Another measure adopted by the Government obliges large companies to provide VAT information immediately

As a measure to prevent fraud, the Council of Ministers approved last Friday to limit cash payments to 1,000 euros, compared to the 2,500 they had until now, although this measure only applies to the self-employed, while for the rest of the companies , the limit will be 3,000 euros.

A measure highly criticized by the self-employed

For the self-employed, it is a comparative grievance, and put the focus of fraud and the underground economy on the self-employed group, especially considering that the largest volume of fraud is monopolized by large companies, and not small businessmen.
This is corroborated by the latest report on the fight against tax fraud prepared by technicians from the Ministry of Finance (Gestha), which indicated that 71.8% of all fraud in Spain came from large companies and large fortunes, the rest corresponding to the self-employed and SMEs. It does not seem, therefore, that the greatest control over payments should be made precisely over the self-employed.
This measure increases the financial costs of this group that should assume the payment of commissions for transfers, deposits of checks, receipts, etc. precisely at a time when financial institutions are increasing the amounts to be charged for these services.
In addition, those who declare continue to be harmed, understanding that those who are "in the dark" and do not issue an invoice will be able to continue collecting in cash the amounts they want and will continue to escape the control of the Administration.

According to trade associations, it will negatively affect consumption

The merchant associations consider that the new limit of 1,000 euros on cash payments will affect consumption, lamenting that the deficit adjustment plan planned by the Government is based mainly on new barriers and tax increases for households and companies.
They explain that the new limit of 1,000 euros for cash operations will affect commercial activity. "It represents a barrier to consumption and a new transaction cost, which practically forces all citizens to have a card," he adds. In any case, small, medium and large business organizations consider it a mistake to propose this measure in the middle of the Christmas campaign without having previously consulted the most affected sectors.
They unequivocally defend the fight against tax fraud in Spain. However, they consider it disproportionate to implement such a low limit for cash operations “that practically puts any consumer who makes purchases in the store under suspicion. Therefore, it would be convenient to act directly on the sources of fraud and the underground economy in Spain, which are recognizable, instead of putting pressure on households and companies with new taxes and obstacles to their activity.

Large companies will have to provide VAT information at the time it occurs

The action also includes the immediate supply of VAT information, a measure that was pending in the last legislature of the PP and that was scheduled to come into force on January 1, 2017. In fact, the Minister of Finance and Public Function, Cristóbal Montoro advanced a few days ago that the Government would implement new measures to control the liquidations of this tax.
The immediate provision of VAT information is a new management system for this tax for companies and professionals, based on real-time information and which expedites refunds, provides the taxpayer with tax data for their declaration and improves tax control.
This is an adaptation of the procedure to the new technologies that will foreseeably only be mandatory for large companies, VAT groups and registered in the monthly refund regime, a group of around 62,000 taxpayers, while for the rest it will be voluntary.
The group forced to use the new Immediate Information Supply (SII) system represents 80 % of the total turnover of VAT taxpayers in Spain, as pointed out by the general director of the AEAT, Santiago Menéndez, when he presented this project in the previous legislature of the PP. Likewise, through this decree law the Government also intends to carry out a tightening in deferred payments.
This series of actions falls within the plan to fight fraud announced by Montoro a week ago and which, among other things, is intended to soften the adjustment to meet the deficit. If tax collection can be improved, as in this case VAT is, the need to raise the tax burden will also be limited.
In this sense, Menéndez assured at the beginning of this month of November that the Treasury will raise the collection by 1,000 million in the fight against fraud. This additional effort, assured the director of the Tax Agency, will help to meet the deficit agreed with Brussels.